Tax group: assess group risks before joining, selling or facing liability

1. Draw two maps rather than one group chart

Draw the legal entities with their own names, legal forms and tax numbers. Then prepare separate maps for VAT and corporate income tax. For each, record who you believe belongs, from when and on which document that view rests. Sharing an accountant, trading name or shareholder is not a complete tax analysis. Keep original decisions, applications and later changes with the same structure.

Record the decision needed now: joining, selling a business, separating a division or contesting a liability notice. When buying, establish which historical records the seller will provide. Ask which regime and members applied on the relevant date, as well as whether a tax group exists. This prevents parties discussing different groups in the same conversation.

2. Test every type of connection for VAT

For VAT, the Tax Administration requires financial, organisational and economic links. For companies with share capital, its financial starting point is more than fifty percent of the shares, including control, in the same hands. That percentage does not replace the other conditions. Examine actual management, connected activities, taxable business status and establishment in the Netherlands. Foundations and certain holding companies require separate attention that a shareholding list alone cannot resolve.

Support the position with shareholder details, voting arrangements, management roles and descriptions of customers and internal activities. A new chart may conceal an older actual management structure; date all changes. In a cross-border group, also examine which head office or permanent establishment can participate. Do not automatically include foreign businesses because they share the commercial group's name or owner.

There is also a composition requirement: under the official conditions, the VAT group must include at least one bv, cv, foundation or association. A group consisting solely of the listed natural-person business forms — sole proprietorship, professional partnership, general partnership or husband-and-wife partnership — is not possible. Close cooperation or shared management therefore does not suffice for two sole proprietorships. Check this legal-form condition before assessing the other links; separate conditions remain relevant for certain holding companies.

3. Do not apply the 95% conditions to VAT

For corporate income tax, official guidance includes a parent's holding of at least 95 percent of the shares, profit entitlement, capital entitlement and voting rights. Legal form, financial year, profit calculation and establishment also matter. Special options exist for structures with EU intermediate or top companies; they do not mean every foreign group company itself joins the Dutch group. The application must therefore match the actual structure.

Participating subsidiaries' results are attributed to the parent in this tax group. This may allow profits and losses to be offset, but does not settle every existing loss position or future reorganisation. Have the consequences calculated per company and period. A sale valuation based solely on adding commercial losses may misrepresent their availability and conditions for tax purposes.

4. Identify the decision, actual circumstances and start date

For VAT, the Tax Administration describes recognition on request or its own initiative, but also operating as a group without a decision if the conditions are met. The absence of one letter therefore does not justify ruling out a group without further examination. Conversely, changed facts require examination of whether the previously recognised group remains the same. Keep the original date and subsequent changes separate.

For corporate income tax, applying is a distinct step. Do not copy the VAT reasoning into corporate income tax. Before joining, establish the intended date, which conditions will then be met and who will apply. A desired date in a purchase agreement is not the same as tax recognition. Have any options for an earlier start date examined specifically instead of assuming a general right to retroactive effect.

5. Check internal invoices and the position outside the group

No VAT is charged on supplies between members of a VAT group. This does not mean the business owes no VAT outside the group or can deduct all input VAT. The Tax Administration describes joint returns and, subject to conditions, separate returns for individual parts. Using the correct individual VAT identification number also remains important for external transactions. Check the numbers actually used in your records and invoice templates.

List internal services, shared premises and purchases from third parties. Identify taxable and exempt external turnover and how costs are allocated. When group membership changes, establish when invoice processing may change. Do not correct old invoices solely on a new chart without having the group's actual and legal composition in that earlier period assessed.

6. Assess liability and departure in separate files

For VAT, the Tax Administration warns that members may be held liable for group debts. It links the end of joint and several liability to receipt of the termination notification and states that earlier periods remain relevant. The sale date alone, or an agreement that the buyer bears everything, therefore does not provide a safe, complete answer to the collector. Have the nature, period and legal basis examined specifically.

Keep evidence of the change notification and its receipt. On a sale, establish which old returns, corrections and ongoing inspections remain and how information will be shared later. A contractual indemnity may matter between the parties, but does not automatically replace the tax assessment. For a corporate income tax group, examine its own termination and transaction consequences separately; the specific VAT rule must not be treated as a general settlement rule for every tax.

7. Fictional example: a sold subsidiary receives an old VAT claim

A group sells a subsidiary and immediately changes its internal accounting chart. Months later, VAT from an earlier period becomes disputed. The seller believes only the buyer remains responsible, while it is unclear when the group change was notified to the Tax Administration. The file also contains a corporate income tax decision wrongly used to prove the VAT position. This example is fictional.

The parties collect the separate group documents, purchase agreements and proof of notification. The relevant debt period, members and liability letter are then examined. A tax lawyer can assess tax defences and response deadlines; the contractual indemnity remains a separate matter. The example does not predict who ultimately pays, but shows why the sale, group status, notification and historical debt cannot be reduced to one date.

8. Checklist for a tax group decision

At the first meeting, ask for a clear distinction between routine administration and legal assessment. Which group is meant, which facts are missing and which step is needed before signing or within a received response deadline? Record which specialist actually handles the application, change or defence and who checks the figures reconcile.

After the decision, retain both the tax documents and records of practical implementation. Check which business files, who has access, which numbers appear on invoices and which old files need monitoring. Initial advice on membership does not automatically approve all internal transactions or historical returns. Identify the remaining questions in the handover file as well.

• Separate VAT and corporate income tax maps for each date.
• Shares, voting rights, management and economic connections.
• Applications, decisions and change notifications with proof of receipt.
• Internal invoices and external taxable/exempt turnover.
• Historical debts, investigations and relevant periods.
• Purchase agreements, indemnities and explicit responsibility for proceedings.